What is a collar?

Using the proceeds of a short call to finance a long put

A collar is employed when an account sells a call against a round lot (100 shares) of shares to finance a put. Depending on your strike placement, collars can be costless. Additionally, collars can also result in a credit or debit as well. Collars may be done in a cash or margin account.

Margin Requirement for a Collar

Requirement may vary based on the value of the underlying 

Initial below $3.00/share: 100% of the stock + the cost of the put option and no requirement on the short call  

Initial $3.00/share and above: 50% of the stock + the cost of the put option and no requirement on the short call  

Maintenance below $3.00/share and the call option is in, or out of, the money: lesser of 10% of the strike price of the put option + 100% of the out of the money amount on the put option or 100% of the call option strike price  

Maintenance above $3.00/share and the call option is in, or out of, the money: lesser of 10% of the strike price of the put option + 100% of the out of the money amount on the put option or 25% of the call option strike price